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Is Washington, D.C. a no-tax state?

No. Washington, D.C. is not a no-tax jurisdiction. Residents pay a local income tax ranging from 4% to 10.75%, a sales tax currently at 6%, and a residential property tax of $0.85 per $100 of assessed value. D.C. taxes are among the highest in the DMV region.

No. Washington, D.C. is not a no-tax jurisdiction. Residents pay a local income tax ranging from 4% to 10.75%, a sales tax currently at 6%, and a residential property tax of $0.85 per $100 of assessed value. D.C. taxes are among the highest in the DMV region, and anyone moving to or working in the District should plan accordingly.

D.C. has taxes - and quite a few of them

The confusion is understandable. People sometimes conflate D.C.'s unusual political status (it isn't a state, lacks voting representation in Congress, and has its own hybrid government) with the idea that it operates outside the normal tax system. It doesn't. The District of Columbia runs its own full tax apparatus through the DC Office of Tax and Revenue (OTR), and it collects income taxes, sales taxes, property taxes, and an estate tax.

Income tax: 4% to 10.75%

DC's income tax has seven brackets with rates of 4%, 6%, 6.5%, 8.5%, 9.25%, 9.75%, and 10.75%, applying to single filers, married filing jointly, married filing separately, and head of household statuses. The top rate jumped in 2022, rising from 8.95% to 10.75%, and the number of brackets expanded from six to seven at the same time.

Any individual domiciled in the District at any time during the tax year - or who maintains an abode in D.C. for 183 or more days - is subject to DC income tax. Part-year residents get some relief: they can generally subtract income received during the portion of the year they were not DC residents when calculating DC taxable income.

There are offsets. Social Security retirement and Railroad Retirement benefits are tax-exempt in Washington, D.C. However, military retirement pay is fully taxable. For 2025, the DC Earned Income Tax Credit increased from 70% of the federal EITC in 2024 to 100% for tax year 2025, which is a meaningful benefit for lower-income filers.

Sales tax: 6% now, 7% coming

DC's general sales tax rate on tangible personal property, digital goods, and taxable services remains 6.0% through September 30, 2026. The general sales tax rate will then increase to 7.0% beginning October 1, 2026. That increase was already passed by the DC Council - it was simply delayed by the Sales Tax Increase Delay Amendment Act of 2025.

One thing that simplifies life for DC businesses: the District imposes a uniform sales tax rate with no additional local levies, unlike many states where local jurisdictions can add their own taxes on top. Certain categories carry different rates. Hotels are taxed at 15.95% on gross receipts from furnished rooms or accommodations. Motor vehicle and utility trailer rentals are taxed at 10.25%.

Property tax: low rate, high home values

Usable and occupied residential properties in DC are taxed at a rate of $0.85 per $100 of assessed value. Single-family homes, row houses, and townhouses pay $0.85 on the first $2.5 million in assessed value, and $1.00 on value above $2.5 million - the so-called "mansion tax" the Council added in the 2025 budget.

The rate itself is modest. Homeowners in the nation's capital pay some of the lowest property tax rates in the country - DC's effective property tax rate works out to 0.63%. The median real estate property tax payment, though, is $4,594, which sits well above the national median - because DC home values are high, not because the rate is punishing.

Estate tax

For 2025, DC estates valued over $4,873,200 are subject to a city estate tax, with rates ranging from 11.2% to 16%. Maryland is one of only a handful of jurisdictions that also levies both an estate and an inheritance tax.

How D.C. compares to Virginia and Maryland

For DMV-area residents weighing where to live, the differences are real. Virginia's income tax tops out at 5.75% with no local income tax anywhere in the state, making the state rate the entire income tax burden. Maryland also has a progressive income tax from 2% to 5.75% at the state level, but each county adds a local income tax between 1.75% and 3.20% on top of that.

D.C.'s property tax, though, is friendlier than both neighbors. Maryland's property tax rates per $100 of assessed value are $1.091 in Montgomery County and $1.465 in Prince George's County; in Virginia, Arlington County charges $1.03 per $100, Alexandria $1.13, and Fairfax $1.184. DC's $0.85 rate undercuts all of them.

People who live in Virginia or Maryland but work in D.C. aren't off the hook, either. If you live in Virginia and work in DC, DC taxes your DC-source income; Virginia then gives you a credit for taxes paid to DC, so you don't double-pay - the net result is that you pay the DC rate on work income and the Virginia rate on any other income.

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